Flower power – The recent growth of floriculture

by C. Bloskie*

Introduction

Much of Canada’s economic development has centred around the exploitation of its natural resources. None has played a more pivotal role than agriculture, notably the opening-up of the grain belt on the prairies early in the last century. Because of the dominant role grain, especially wheat, plays in our national mythology¹, some recent new trends in farming patterns have gone largely unnoticed.

Most Canadians would probably be surprised to learn that floriculture receipts are closing in on wheat, finishing 2002 only 20% below the $2.3 billion earned from wheat. This note documents the shift in farming towards floriculture and nursery products in recent years, including which provinces have driven their growth and why farmers find these crops more appealing.

Floriculture receipts²

Over the last three decades, floriculture grew from a $44 million business to $1.8 billion in 2002. The only downturns in growth in this sector occurred during the recessions in 1982 and in the early 1990s (when receipts from wheat tumbled even more, off by one-third). As a share of total farm crops receipts, floriculture expanded from 2.4% in 1971 to 12.8% in 2002, while wheat fell from 34.6% to 16.1% over the same period.

Figure 1

While wheat is still king in Canada, particularly on the prairies, changing weather conditions, declining prices and rising costs have encouraged the farm sector to diversify its crops. One result is that wheat receipts fell from $3.5 billion in 1997 to $2.3 billion during the drought in 2002, while floriculture income rose from $1.1 billion to $1.8 billion.³

Several factors have driven the growth in floriculture. Some relate to the nature of the farms themselves. Like grain, greenhouse and nursery production has become increasingly concentrated on a few very large farms, so economies of scale allow for more efficient operations. As well, greenhouses can be nestled close to customers, minimizing transportation costs. Floriculture also tends to be more highly specialized than any other crop, which increases cost efficiency in production, albeit at the cost of more vulnerability to changing market conditions and prices.

Another factor is increased demand, heightened by the aging population, the popularity of gardening as a hobby and the boom in new home construction. Floriculture crop receipts are concentrated in Ontario (50.5% in 2002), British Columbia (23.1%), Quebec (11.2%), and Alberta (6.2%), provinces in which new housing starts are also the highest.

Figure 2

Greenhouse Revenues⁴

Floriculture accounted for 70% of greenhouse revenues in 2002 (vegetables made up the rest). Floriculture sales, which consist of ornamental flowers and plants, rose over 10% from 2001 to $1.42 billion. Domestic wholesalers accounted for a quarter of sales, followed by mass market chain stores, direct sales to the public and retail florists, while 8% were exported. Central Canada and BC dominate the market at 63% and 22%, respectively. The Prairies accounted for 9.5%, with almost half of all sales direct to the public. The revenue generated in the Atlantic provinces was split between Nova Scotia and New Brunswick, predominately through chain stores and direct sales.

Nursery stock consists of living plants (grown in fields or containers) that are sold with their root systems intact. These include annuals and perennials ranging from trees, shrubs, and rose bushes to bedding plants. Sales of nursery stock in 2002 rose 5% to just over $500 million. Ontario accounted for almost half of the revenues, led by sales to garden centres and landscape contractors, with the rest split between retail, mass merchandisers, other growers of nursery stock and other buyers. BC had a third of the total market (with a similar distribution of sales), while Quebec and the Prairies each had about 10% and the Atlantic region trailed at 2%. Quebec sales were dominated by garden centres, while landscape contractors and retailers buoyed revenues in the Prairies.

Provincial trends

Figure 3 shows that the lion’s share of floriculture receipts come from the central provinces, although this has dwindled over time. BC’s share has been steadily expanding, while the Prairies have held steady and the Atlantic provinces have lost ground.

Figure 3

Ontario has played the dominant role in Canada’s floriculture. Although its share of receipts has declined as BC has grown, it still accounts for over 50%. (With steady gains since 1994, floriculture now accounts for a quarter of Ontario’s total crop receipts, up from just 6% in 1971.) Quebec has maintained its 11% to 12% share of revenue over the past three decades, peaking at 15% in the early 1990s. Growth has picked up in the past two years, rising 18.5% in 2002, double Ontario’s pace.

British Columbia has had the fastest growth in floriculture over the last three decades. Spurts of double-digit growth in the late 1980s and again in 2000 tapered off to a 7.4% rise in 2002. The province’s share of total floriculture receipts has risen steadily, reaching almost 23% in 1990 and maintaining that share up to 2002. Floriculture climbed to a peak of 41% of BC’s total crop receipts in 1990, and after falling slightly has risen to almost that level again. More temperate weather allows greenhouses to operate an average 8.9 months a year in BC, versus 8.7 in Ontario and just 6.8 in Quebec, thereby lowering costs. BC also led the growth of floriculture exports in the last decade, which largely explains its increase in market share and central Canada’s decline.

On the Prairies, floriculture has made only small inroads into the dominance of grain crops. Saskatchewan has long been the country’s major wheat grower and still accounts for 51% of total production, but its floriculture industry is only 1.8% of Canada’s total. However, while the drought led to cash from wheat falling almost 20% in 2002, receipts from floriculture jumped 34%, after similar gains in the previous two years, suggesting some diversification from wheat. Wheat continues to account for almost a third of Saskatchewan’s total crop receipts, with floriculture still less than 1% despite the recent growth. Alberta and Manitoba have hovered around a 6% and a 2% contribution, respectively, to Canadian floriculture. While both provinces are major wheat producers, wheat’s share of total crops receipts in each province has dwindled over the past two decades, from over half to just a quarter by 2002. The slack was not taken up by floriculture however, as its contribution remained fairly constant. Instead, canola, oats, barley and potatoes helped to beef up crop revenues.

Floriculture in the Atlantic provinces accounts for a much smaller share of total Canadian receipts from crops, just over 5%. Outside of PEI, however, floriculture has made an increasing contribution to crops. Floriculture and nursery cash receipts have risen from a quarter of Newfoundland’s total to over 60% in the last three decades. In Nova Scotia, growth has oscillated, but the sector has consistently accounted for about 25% of the province’s crop income. In New Brunswick, it has risen from just 1% to a fifth of the total. New Brunswick was the only province to suffer a decline in floriculture receipts in 2002 (-2.9%). This seems to be a familiar pattern, however, where several years of stellar growth are followed by a minor retrenchment. Overall, New Brunswick has accounted for the largest share of the Atlantic provinces to the Canada total floriculture sector since 1998, when it took over from Nova Scotia whose share has steadily declined for most of the past 30 years, hitting 2% in 2002.

Share of Canada's total floriculture and nursery receipts

Conclusion

Despite regional variations in the expansion of floriculture and nursery products over the past three decades, the overall trend has been a steady increase in receipts from this industry. With the ability to control the climate inside greenhouses and spurred by the housing boom, floriculture is an important source of farm crop receipts in Canada. And given the popularity of gardening among seniors, the aging of the population offers a further source of growth.

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Notes

^* Current economic analysis (613) 951-3634.

¹. See for example H. A. Innis, “The Wheat Economy” in Essays in Canadian Economic History, ed. by M. Innis, University of Toronto Press, 1956.

². Floriculture is defined as establishments primarily engaged in growing floriculture products and propagating materials. The data are adjusted for farm-to-farm sales and includes nursery receipts.

³. The classifications are somewhat misleading, as wheat is about half of the total grain sector, while floriculture and nursery includes a wide range of flowers, trees and sod.

⁴. Total sales data from the 2002 Greenhouse, Sod and Nursery Survey (Catalogue 22-002-XIB), which is unadjusted for farm-to-farm sales.